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VCs are starting to partner with private equity to buy up call centers, accounting firms and other "mature companies" to replace their operations with AI (techcrunch.com)

submitted 3 days ago by [email protected] to c/[email protected]

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[–] [email protected] 11 points 2 days ago* (last edited 2 days ago) (2 children)

Then you need to look into how private equity works.

They buy mature companies, often with borrowed capital, and then place the debt on the purchased company. They essentially make companies take on a massive loan to buy themselves from themselves, except the private equity firm ends up the owner.

The company then goes into overdrive trying to pay off the debt, while the firm makes changes intended to make the company "more efficient". All while paying themselves "consulting fees" and "bonuses" for stepping in and "helping" the company do better.

This usually means mass layoffs, dumping assets, paycuts, restructuring...

Best case scenario, the company was already failing, and now it fails faster.

Worst case... The company was doing perfectly fine, making a sustainable living for its employees. And then it gets purchased by a private equity firm.

Suddenly everything is on fire. Not a single penny can go unpiched, workplace comfort unsacrificed, or employee unoverworked. And that that is the new norm, is the good ending.

Private equity makes money by killing the golden goose, and then finding another. And then another. And then another.

[–] [email protected] 1 points 1 day ago

example of a parasitoid, unlike parasites, they kill the host.

[–] [email protected] 1 points 2 days ago (2 children)

I don't know much about private equity. So I appreciate the explanation. But that all just sounds like modern business to me. It's a product of who we are and what we allow.

[–] [email protected] 1 points 1 day ago

thats whats happening to red lobster, SEARS was done by scummy parasitic ceo of sears, toysrus,kmart?,,,etc

[–] [email protected] 0 points 2 days ago* (last edited 2 days ago)

What do you mean "but"?

This doesn't produce anything. It removes jobs instead of creating them. And by the end there is one less company in the system.

I wrote in response to you saying this is what they "should" be doing. That it would either work, or not.

But this is working sustainable businesses being butchered for their value on the meat market, rather than operated long term.

It most certainly isn't what they "should" be doing.

If this is the best way to make money, the rich will continue to do it instead of starting new companies. That is not going to have pleasant long-term effects on the world.